Medicare drug plan costing seniors more

WASHINGTON — As if soaring prices for food and gasoline weren't enough of a worry, most senior citizens in Medicare's prescription program are paying considerably higher monthly premiums for coverage this year, according to a study to be released Thursday.

Those in the 10 largest plans -- which account for nearly three-fourths of seniors signed up for drug coverage -- are paying an average of $26.39 a month, or 16 percent more than last year, according to the analysis by Avalere Health, an information company serving the health-care industry.

The rise is modest in dollar terms, and some of the top plans actually lowered their premiums for 2008. But on average, the percentage increase for the prescription plan is greater than the change in Medicare's Part B premium for outpatient care, which rose 3 percent in 2008.

"A 16 percent increase is significant in and of itself, because premiums are rising rapidly at a time when Medicare beneficiaries are finding it harder to afford it," said Dan Mendelson, president of Avalere. "These are individuals on a fixed income who are facing rapidly rising prices elsewhere in the economy."

Premiums for many seniors appear to be going up faster than the cost of coverage for commercial insurance plans that serve workers and their families, he said. Data from Mercer, a benefits consulting firm, show that drug-benefit costs rose a little more than 9 percent last year for large employers. Both kinds of coverage are delivered by private insurers, but because the Medicare plan is heavily subsidized by taxpayers, a precise comparison is difficult.

While seniors are one of the most important groups of voters, Medicare has not been a major issue in this year's election thus far. But the rise in prescription premiums may boost Democratic proposals to authorize Medicare to negotiate prices with the pharmaceutical industry. On the Republican side, presumptive presidential candidate John McCain supports giving Americans the right to import lower-cost medications from countries, such as Canada, where governments set prices.

Medicare officials say the prescription program, with more than 25 million beneficiaries, is a successful example of how private companies can improve the delivery of government benefits. They point out that in many cases, monthly premiums are lower than estimated at the program's inception and they credit that to competition among private plans.

But independent experts say the initial estimates may have been too high for several reasons, such as the government had no experience with such a program.

Medicare officials said senior citizens can find better deals if they shop around for coverage during the annual open-enrollment period, which runs from Nov. 15 to Dec. 31.

But most seniors don't switch.

"The tendency for many people is to stick with the plan they have from year to year," said Patricia Neuman, a Medicare expert with the Kaiser Family Foundation.

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Rising premiums

Of the top 10 Medicare prescription program plans, six raised their premiums for 2008, while four reduced them. Average premiums for the most popular plan, AARP MedicareRx Preferred, rose by 15 percent to $32.08 a month, according to a study out Thursday. The plan, offered by UnitedHealth Group, has more than 2.7 million members.